XWELL Restates Financials Due to Revenue Recognition Issues

TL;DR

XWELL's financials are toast, they're restating everything due to revenue recognition problems.

AI Summary

XWELL, Inc. announced on April 12, 2024, that it will not rely on previously issued financial statements for the fiscal year ended December 31, 2023, and interim periods thereafter. This decision stems from an ongoing internal review concerning the timing of revenue recognition for certain contracts. The company expects to file amended financial statements once the review is complete.

Why It Matters

This indicates potential accounting irregularities that could impact the company's reported financial health and investor confidence.

Risk Assessment

Risk Level: medium — The need to restate financial statements due to revenue recognition issues suggests potential accounting control weaknesses and could lead to uncertainty for investors.

Key Players & Entities

• XWELL, Inc. (company) — The company filing the 8-K.
• April 12, 2024 (date) — The date of the report and earliest event.
• December 31, 2023 (date) — The fiscal year end for which financial statements are being re-evaluated.

FAQ

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share XWEL The Nasdaq Stock Mar
• $1,613,000 — elated to the Treat business segment of $1,613,000 for Q3 2023; however, such amounts are
• $6.8 million — ted impairment charges of approximately $6.8 million associated with certain intangible asse

Filing Documents

• tm2411774d1_8k.htm (8-K) — 28KB
• 0001104659-24-046836.txt ( ) — 199KB
• xspa-20240412.xsd (EX-101.SCH) — 3KB
• xspa-20240412_lab.xml (EX-101.LAB) — 33KB
• xspa-20240412_pre.xml (EX-101.PRE) — 22KB
• tm2411774d1_8k_htm.xml (XML) — 4KB

02 Non-Reliance on Previously Issued

Item 4.02 Non-Reliance on Previously Issued

Financial Statements or a Related Audit Report or Completed Interim Review

Financial Statements or a Related Audit Report or Completed Interim Review. On April 12, 2024, the Audit Committee (the "Audit Committee") of the Board of Directors of XWELL, Inc. (the "Company"), after audit work performed and consultation with management and with its independent registered public accounting firm, determined that the Company incorrectly applied U.S. Generally Accepted Accounting Principles ("GAAP") as related to the determination of the impairment of the Company's Treat, Inc. ("Treat") business segment for the three and nine months ended September 30, 2023 ("Q3 2023"). The Company is currently in the process of determining the full effect of the misapplication of GAAP as related to the impairment of the Treat business segment and preliminarily estimates that the cumulative effect is an understatement of the impairment expenses as related to the Treat business segment of $1,613,000 for Q3 2023; however, such amounts are subject to revision as the Company finalizes its analysis with its independent registered public accounting firm. These errors have no effect on the Company's previously reported cash and cash equivalents or marketable securities balances or cash runway. The Company previously reported impairment charges of approximately $6.8 million associated with certain intangible assets in its Quarterly Report on Form 10-Q for Q3 2023, filed with the Securities and Exchange Commission (the "SEC") on November 14, 2023 ("Third Quarter Quarterly Report"). As part of its determination, the Audit Committee concluded that it is appropriate to correct the misapplication of GAAP described above for financial statements for Q3 2023 included in the Third Quarter Quarterly Report, by restating such unaudited financial information because the errors in the financial statements are material to the financial statements for Q3 2023. As a result, unaudited financial statements for Q3 2023 should no longer be relied on. Similarly, any previously issued or fi

Forward-Looking Statements: This

Forward-Looking Statements: This Current Report on Form 8-K contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The Company advises caution in reliance on forward-looking Q3 2023. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by forward-looking statements, including the outcome of the Company's completion of the qualification and evaluation of the specific impact of the misapplication of GAAP as related to the impairment of the Treat business segment in the Company's financial results and previously issued financial statements, including the possibility of material adjustments thereto, the discovery of additional and unanticipated information during the procedures required to be completed before the Company is able to file its Annual Report on Form 10-K for the year ended December 31, 2023; and the application of accounting or tax principles in an unanticipated manner. See also additional risk factors set forth in the Company's periodic filings with the SEC, including, but not limited to, those risks and uncertainties listed in the section entitled "Risk Factors," in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC. All forward-looking statements in this Current Report on Form 8-K are based on information available to the Company as of the date of the filing of this Current Report on Form 8-K.

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. XWELL, Inc. Date: April 12, 2024 By: /s/ Scott R. Milford Name: Scott R. Milford Title: President and Chief Executive Officer

View Full Filing

View this 8-K filing on SEC EDGAR